Auto sales grind to a halt

Taiwan's industry won't crash and burn, but forecasts for auto sales this year predict a definite downshift

By Gavin Phipps / STAFF REPORTER

Toyota's Camry.

PHOTO COURTESY OF MANUFACTURER:

Last year the local auto industry enjoyed sales of 485,000 units, an increase of 17 percent on 2003's sales figures, but industry insiders are expecting car sales to grow by a mere 1 percent in the year ahead.

This year could prove to be one of the worst years for automobile sales in Taiwan since 2001, when the number of new vehicles taking to the nation's highways and byways dropped to an all-time low of 347,000 units.

"The forecast is not good. Even though the government has predicted an economic growth rate of 4 percent, we're still seeing rising steel and crude oil prices," said Steven Yang (楊湘泉) of the Hotai Motor Co (和泰汽車).

While the auto industry is expected to have a less-than-financially-pleasing year, 2005 could be a very good year for the consumer. Prices will not be slashed, but they are expected to stabilize and consumers are likely to get a whole lot more for their dollar.

"Car dealers will have to resort to offering consumers more options rather than cutting prices. [Dealers] will be looking to entice with offers such as better stereos, more up-scale seating, improved air-conditioning systems and so on," Yang said.

As a result, car buying trends will diversify. The popularity of expensive four-wheel-drive SUVs is predicted to decrease and cheaper two-wheel drive family hatchbacks such as the Toyota Wish, the Suzuki Solio and the Ford Escape are expected to prove more popular with drivers. Auto manufacturers expect the average customer to pay somewhere between NT$700,000 and NT$800,000 for a new car this year.

These signs of a decrease in consumer spending were clearly evident late last year. Mid-range family cars with a price tag of between NT$650,000 to NT$750,000 were already the nation's most popular autos with cars such as Toyota's NT$600,000 Corolla and its NT$750,000 Camry in pole positions.

With consumers tightening their belts, Taiwan's once-miniscule secondhand-car market has also grown to staggering proportions. While actual sales figures are difficult to assess, estimates put sales of secondhand cars in 2004 at 700,000 units. This number is expected to increase this year, and while it is impossible to predict an actual figure, some believe that secondhand car dealers could increase their market share by 20 to 30 percent.

Luxury high-end imports may still only account for a mere 7 percent of the market, but the most popular brands among drivers with money to burn remain Mercedes and BMW. Between them, the German car manufacturers sold well over 7,000 units last year, the most popular of which was the Mercedes' E-Series.

Of course, those looking to impress with a fancy high-end luxury motor still have to pay through the nose. The standard 25 percent import tariff on cars less than 2,000cc and the 35 percent tariff on those with engine capacities of greater then 3,000cc will not be relaxed in 2005.

Not that this deters genuine car buffs from paying that little extra: popular high-end models such as Porsche's four-wheel drive Cayenne Turbo, which sells for a handsome NT$5 million, and the equally spruce but less expensive, Toyota Lexus RX330, which has a price tag of NT$2 million, will, regardless of the overheads, continue to attract those with deep pockets.

"Luxury high-end cars encompass only a very small percentage of the market in Taiwan, but with upwards of 50 percent of all luxury cars being special imports, I can't see them surpassing seven percent in the foreseeable future," said Yang.